Yamana Gold Announces the Sale of Its Royalty Portfolio for Total Consideration of $65 Million, Creating a New Royalty Company, and Unlocking Further Value by Continuing the Execution of Its Portfolio Optimization Strategy
TORONTO, Feb. 23, 2020 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX: YRI; NYSE: AUY) (“Yamana” or the “Company”) is pleased to announce it has entered into a definitive purchase agreement (the
“Purchase Agreement”) to sell a portfolio of royalty interests and the contingent payment to be received upon declaration of commercial production at the Deep Carbonates Project (“DCP”) at the
Gualcamayo gold mine (together, the “Sale Transaction”) for total consideration of $65 million to Guerrero Ventures Inc. (TSX-V:GV) (“Guerrero”).
The consideration has been structured to realize both immediate value for these non-core assets through a cash component of $20 million and further value from a significant $45 million share position in a newly created, growth-oriented company with a driven and experienced management team. As a founding shareholder, Yamana stands to benefit from participation in the new company, a pure-play precious metals royalty company that has significant potential upside through mineral resource expansions and mine life extensions.
The Sale Transaction marks another step in the Company’s efforts to optimize its portfolio and improve its financial flexibility. The sales consideration is expected to advance the Company’s generative exploration program and for other purposes, including contributing to the Company’s dividend reserve fund. The Sale Transaction also provides Yamana with a meaningful stake in a new royalty company that has a strong asset base, like-minded corporate objectives, and a growth mandate. This model is similar to the approach that Yamana took with the creation of its Brio Gold subsidiary, which subsequently became a successful standalone public company and continues to provide valuation upside to Yamana today following Brio’s acquisition by Leagold Mining Corporation and Leagold’s pending merger with Equinox Gold Corp.
Details of the Sale Transaction
- Guerrero will acquire two portfolios of precious metals royalty, stream and gold loan assets from funds related to Orion Resource Partners (USA) LP (collectively, “Orion”) and Yamana for total
consideration of $268 million and $65 million, respectively (the “Acquisitions”).
- Yamana’s portfolio of assets being sold under the Sale Transaction consists of:
o 1% net smelter return royalty (“NSR”) on gold production from the Riacho dos Machados (“RDM”) gold mine operating in Minas Gerais, Brazil
o 2% NSR on oxide gold production from the Gualcamayo gold mine operating in San Juan, Argentina, once the operation produces approximately 275,000 ounces from January 1, 2020